How’s Our Credit Score Percentage?

Everyone knows that if you have a good credit score, the easier it is to borrow money or get financing. It may be difficult for many people to know how a credit score is compiled. Here we will try to describe the factors in how you your credit score is calculated.

Are You A Late Payer?

Payment history is considered by lenders as the most important variable. Your payment history makes up a full 35% of your score. This info will be placed within your credit report. Creditors will be able to see your payment history when they view your credit report. To keep your score higher, always pay your payments a few days early. Lenders will frown on late payers, and may report you even if you’re only late by a few days. This will definitely for sure reduce your credit rating considerably.

How Much Do You Owe?

This can make up 30% of your credit file and is known as your debt ratio. This simply means how much you owe versus the credit limit. For example we could be in possession of a credit card with a spending limit of $500 and you owe $480 this is considered a very high debt ratio and possibly have a negative influence.

If you can pay down your credit card debts to less than half the credit limit, this will positively influence your credit score. Credit bureaus will not differentiate between payers who pay their whole balance or payers who keep their balance below the 50% mark.

Been Using Credit For Years?

The more time you have had credit, the better. Creditors are more likely to accept applications from borrowers who have a long good credit history. This part makes up 15% of your total.

Don’t make the mistake of closing the account where you have paid the debt off. Credit card accounts you have had for some considerable years, it’s a good idea to, keep the account alive. This will guarantee to keep your credit history going and obviously increase your credit rating.

Do you know the type of debt you have?

Whatever type your debt is, this will be responsible for 10% of your total credit score. There are different types of debts creditors will look for, they are loans, revolving credit & credit cards. The reason creditors score the difference is because loans and consumer financing have fixed monthly repayment plans.

If your revolving credit makes up most of your credit report, that is not very good. This is because lenders know that the monthly minimums will vary every month depending on how much you chose to spend.

Applied Recently For A Credit Card?

To keep your score high, the less times you apply for credit the better. This is responsible for 10% of your credit report. Beware that every time you apply for credit, this will be held on your credit file for 2 years. It is advisable to limit applying for credit cards & loans, over an over agin.

Consumers who are looking to purchase a car are good examples who can get into trouble in this area. When looking to buy a car you will probably allow a few card dealers creditors to run a credit check report at each one to obtain card financing, this will greatly lower you credit score as each credit report is run. Do not let anyone run a report until you are ready to sign on the dotted line.

This is how your credit score is figured. Hopefully, a few of these tips will help you raise your score. The score can range from 300-850. The higher your credit score is the better.

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